PaulK writes:
The central issue is that wages are a cost and in a capitalist system there is pressure to keep costs down. There are a number of ways that has played out, but that is the underlying reason.
But America has always been a capitalist system, so why wasn't this a problem until the last few decades?
Don't you remember your history? Or did you never learn it?
Unrestrained capitalism gone wild was a huge problem in the late 1800's. From the start, capitalism in America had been small-scale and local and made use of skilled labor as well as unskilled. In that environment, companies were aware of their place in their community and of their responsibility to those communities.
Also, in accordance with Adam Smith's teaches, skilled workers were a commodity which was in limited supply, so bosses knew to value their skilled workers -- replacing a skilled worker would be a difficult task -- plus when there was higher demand among different bosses for skilled workers, they needed to offer decent wages to those skilled workers in order to get them to sign on (this is only looking at the forces of capitalism and disregarding the influence of the Guild System which would also have a say in the matter of wages).
Then the Industrial Revolution happened. What it did was to remove the need for skilled workers, since their skilled work was now done by machines operated by unskilled workers (after the minimal training needed to run the machines) -- consider the Luddites (
https://en.wikipedia.org/wiki/Luddite), skilled textile workers who had made a very good living until factories opened with machinery operated by unskilled workers that produced more textiles than they could for much lower cost. Now most of the factory owner's workers were unskilled and hence highly replaceable -- any worker who tried to stand up for himself could be fired immediately and replaced by anyone in that large crowd standing outside the gates hoping for any work.
As a result, the workers were paid poverty wages while the factory owners grew obscenely rich. Furthermore, the workers were exploited mercilessly, which included the use of child labor.
As a result, the rich got ever increasingly obscenely rich while the workers became increasingly poorer, much like what we're seeing now. The main difference now is the middle class. Back in the 1800's, the middle class was small and mainly consisted of small- and medium-scale capitalists. In the post-WWII era, the middle class grew to include many workers, who are now seeing themselves lose that new status.
Now, obviously a capitalist would want to increase the market for his product. Remember that profit = revenues - expenses. One way to increase your profit would be to increase your revenues, which means increasing sales, but instead they chose and again choose to increase profit by diminishing expenses, mainly through the minimization of wages and elimination of jobs. When that was pointed out in the late 1800's, the response was that they were seeking increase sales overseas and not domestically. Of course, not all industrialists were so shortsighted, such as Henry Ford who paid his workers a decent wage so that they would also become his customers. But smart industrialists were too few and far between. We see the same pattern at present in that industrialists are targeting the global market instead of worrying about the domestic market.
You will of course ignore this recommendation, but there is a documentary on Netflix, "Genius of the Modern World" (
https://www.netflix.com/title/80186252), which includes an episode on Karl Marx. Marx was a smart thinker and got a lot of things right about capitalism (which he recognized as a very powerful and successful economic model, but one that would grow into a monster that devours everything, including itself -- which is what we do see happening). For example, in writing
Das Kapital, Marx researched extensively through labor records to cite case after case of worker exploitation, including the deaths of children working in unsafe factory conditions. I disagree strongly with many of his conclusions, including his prediction of a workers' revolution that would establish a socialist system, though I can see us heading for a workers' revolt that will instead lead to bloody anarchy like the French Revolution and Reign of Terror.
That is what we were heading towards in the late 1800's, but instead we found a solution. The solution was the rise of the unions in conjunction with the Progressive Party (
https://en.wikipedia.org/...ve_Party_(United_States%2C_1912)) which split off from the Republican Party in 1912. Basically, capitalism has no interest in protecting workers' rights nor social interests, so somebody else has to do that. The unions worked to protect workers' rights in conjunction with labor laws (including child labor laws). Laws establishing programs of security safety nets were passed. The crisis was averted for the time being.
The events of the 1920's through WWII pretty much swamped the normal effects of capitalism. The post-war period into the 60's were predominated by three factors:
- Strong unions that ensured good wages for workers that enabled them to become middle class, buy a house, and send their children to college (which were also subsidized by the government).
- Top bracket income tax rates of 91%, which had the richest contributing their fair share to our country.
- Our nation's position as the only major industrial country whose factories had not been destroyed by the war.
Vietnam, Watergate, and the Oil Crisis also swamped normal capitalism. Reagan's economic policies (eg, anti-union, deregulation, massive tax cuts for the rich, trickle-down -- which never worked, never will, and destroyed the economy of Kansas) opened the door to the unrestrained evolution of capitalism to its ultimate state of maximal exploitation.
And that brings us to the current situation.
™ Version 4.2
